Avoid holding uninsured bank deposits

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Dear Dr. Don,
I have deposits with Wachovia, NA well above the $100,000 FDIC insurance limit. When I check Bankrate’s Safe & Sound rating for Wachovia, its rating is very poor.

Wachovia of Delaware and Wachovia FSB both have a sound rating. Since they appear to be different companies held under a holding company, what happens to my funds if something happens to Wachovia NA? Are they protected through the larger Wachovia?

Lastly, am I assuming they are part of the bigger puzzle, or is there more than one Wachovia?
— Wondering Wanda

Dear Wanda,
You bring up a great point. So many banks are owned by holding companies, it’s hard to figure out what’s what. The FDIC has a directory called Find a Bank Holding Company that is very helpful in sorting things out.

The results match with the FDIC’s Bank Find directory, which shows that Wachovia has five active financial institutions.

The following comes from the FDIC Insured Deposits FAQ page:

Can I increase my insurance coverage by placing deposits with different insured banks?

Deposits with each FDIC-insured bank are insured separately from any deposits at another insured bank. If an insured bank has branch offices, the main office and all branch offices are considered one insured bank – a depositor cannot increase insurance coverage by placing deposits at different branches of the same insured bank. Similarly, deposits held with the Internet division of an insured bank are considered the same as deposits with the “brick and mortar” part of the bank, even if the Internet division uses a different name. If two banks are affiliated, such as having a common holding company, but are separately chartered (indicated by having two different FDIC Certificate numbers), deposits in each bank would be separately insured.

There are five separately chartered Wachovia banks. Deposits held in different banks would be separately insured. Confirm this with your bankers.

I’m a belt-and-suspenders kind of guy, so I can’t recommend individuals hold uninsured deposits with a financial institution. If you’ve got so much money invested in bank deposits that you’re over the insurance limits, you need to rethink how you bank.